UK govt. asked to reconsider approach to renewable energy subsidies

Orkney Islands Council is calling for the UK Government to reconsider its approach to renewable energy subsidies following publication of “strike prices” which fall short of offering special rates for marine-based power generated on Scotland’s islands.

The Department of Energy and Climate Change consulted earlier this year on strike prices – the minimum prices developers could expect to be paid – for electricity generated from renewable sources.

The consultation included an option for a higher strike price for islands-based renewables projects – an “island uplift” – to reflect the higher costs of transmission from Scotland’s island areas.

While the strike prices announced today retain an island uplift for onshore wind projects, there is no such uplift for energy generated from wave or tidal technologies.

“The Council, and others with a keen interest in maximising Orkney’s huge potential for generating energy from the seas around us, have pressed DECC on this issue over a considerable period of time. So it is highly disappointing that our calls to level the playing field for these emerging technologies seem to have been ignored.

“This latest announcement is a body blow for the timely commercial development of the wave and tidal sector in the UK, and one which destabilises the case for a vital transmission link to the mainland markets.

“It is nonsensical that one technology – onshore wind – has been granted an islands uplift, while marine-based projects have not, when transmission costs are the same regardless of the source of generation.

“Wave and tidal energy are central to the UK meeting its climate change and clean energy targets – it’s vital that strike prices reflect the added challenges of harnessing marine energy in Scotland’s islands, to ensure developers and investors are not turned back by the higher costs involved, thus losing the UK its hard won lead in this new global industry.

“We would urge the UK Government to give serious consideration to introducing and islands uplift for islands-based marine renewables, and to urgently progress grid underwriting and guarantees for island transmission links, so that the country’s greatest marine energy resources can contribute to meeting avowed national targets.”

2 Responses to “Orkney council frustrated by short sighted renewables strike prices”

Following detailed technical and environmental site studies, ScottishPower Renewables (SPR) has confirmed that they will not be taking forward their lease option to develop the Argyll Array Offshore Windfarm in the near future. The company has stated that the project may be viable to reconsider as offshore wind technology develops in the longer term, but estimates that will not be within the next decade.

ScottishPower Renewables has been working on the Argyll Array project since 2009, and a variety of detailed technical and environmental studies have been completed as part of their initial development work. These studies have been thoroughly reviewed over the last 12 months in order to evaluate the viability of the project and on the basis of these findings, a decision not to progress the project, has been taken by both ScottishPower Renewables and The Crown Estate.

The main issues affecting the progression of the project are the ground conditions in the site, particularly the presence of hard rock, coupled with challenging wave conditions which could impact construction. Beyond this, there is a significant presence of basking sharks, which environmental groups continue to study to get a greater understanding of their movements in the area.

Jonathan Cole, Head of Offshore Wind at ScottishPower Renewables, said: “We believe it is possible to develop the Argyll Array site, it has the some of the best wind conditions of any offshore zone in the UK.

“However, it is our view that the Argyll Array project is not financially viable in the short term. As cost reductions continue to filter through the offshore wind industry, and as construction techniques and turbine technology continues to improve, we believe that the Argyll Array could become a viable project in the long term.

“The rate of progress in development of foundation and installation technology has been slower than anticipated. The current outlook for offshore wind deployment in the UK suggests this will not significantly improve in the short term. This supports the view that it could take 10-15 years for the required technology improvements to be available for this project.

“The Crown Estate agrees with our findings and development work will cease on the project with immediate effect. This will give ScottishPower Renewables the opportunity to fully construct the West of Duddon Sands project with DONG Energy, and continue development work on the East Anglia Zone with Vattenfall.”

The Crown Estate manages the seabed around the UK, including leasing for offshore renewable energy projects. The organisation, which works on a commercial basis with profits paid to the UK Government, does not regulate or give planning consent for projects.

Ronnie Quinn who leads The Crown Estate’s Scottish Energy & Infrastructure team said: “While there is an excellent wind resource at the Argyll Array site, both organisations agree that the project should not proceed at this point in time. Developers have to take a wide range of factors into account when preparing to apply for planning consent – this decision by The Crown Estate and SPR follows a very thorough assessment of all those factors. We look forward to continuing to work with ScottishPower Renewables on other sites and programmes.”

ScottishPower Renewables continues to demonstrate commitment to offshore wind in the UK, with the 389MW West of Duddon Sands project currently under construction in the Irish Sea with DONG Energy. An application for consent was also submitted in 2012 with Vattenfall for the East Anglia ONE offshore windfarm, which could have a capacity of up to 1200MW.